Newsletter

Part III: Does the Willoughby District hold the key to affordable housing?

Recreational vehicles currently serving as permanent housing dot the area known as "The Village" one street away from Willoughby Avenue.

Nancy Decherney, Executive Director of the Juneau Arts & Humanities Counci, and Art Rotch, Artistic Director for Perseverance Theatre, look over land owned by the city that could hold a new arts center backed by Perseverance Theater and the Juneau Arts and Culture Center, background, that would be built between Centennial Hall and the JACC.

The city's master plan for the Willoughby District calls for more buildings like the one Brad Cure built, with a business on the first floor and residential units above. Cure also developed the Patagonia Condominiums a few blocks away.

Recreational vehicles currently serving as permanent housing dot the area known as "The Village" one street away from Willoughby Avenue.

Juneau faces a housing crisis and the Willoughby District isn’t helping. Yet.

The 35 acres of flat land that makes up Willoughby accounts for barely one-quarter of 1 percent of Juneau’s zoned residential parcels and its 120 housing units make up less than 1 percent of Juneau’s current housing inventory.

Juneau’s population is estimated to have grown by more than 400 households in 2011, according to Juneau Economic Development Council’s 2012 Juneau Housing Needs Assessment. Between 2010 and 2012 only about 80 new housing units were added to Juneau’s market.

With less than 2 percent vacancy rates for both rentals and single-family homes, Juneau’s housing market is well below the 5 percent rate considered healthy.

Sixty-six percent of Juneau’s employers pointed to the high cost of employee housing as a problem, according to JEDC’s 2012 Juneau Housing Needs Assessment.

While Willoughby was recently re-zoned for up to 80 residences per acre, it currently averages slightly more than three. Compared to the current total of 120 units, if every inch of the district was developed into mixed use housing and commercial to it fullest, 2,800 units could now fit. A more realistic and conservative estimate puts potential growth at between 400 to 800 units – one to two years of growth on par with 2011.

What happened in the past to stifle Willoughby’s housing growth? Good intentions.

Historic zoning requirements set height and density limits that restricted development. And the lack of mix use permitting forced developers to choose between commercial or residential projects. Parking requirements set to encourage visits from the greater Juneau community resulted in acres of asphalt parking lots.

All of these changes, the city hopes, will spur development over the next quarter century that will turn Willoughby into a pedestrian-centric, vital community.

CBJ Community Development Planner Greg Chaney said the overall philosophy for the district is to create a place for locals to live, work and shop with little reliance on cars.

“Where they don’t need one to survive,” Chaney said. “If you can live without one you can save a tremendous amount of money.”

However, Chaney said the city is not trying to force its citizens to ditch their cars.

“We are not saying anybody has to live this way,” Chaney said. “People can still have large houses on the edge of town if they choose.”

Folks who prefer proximity to work and entertainment and don’t mind denser living could fill the Willoughby and reduce pressure on Juneau’s entire housing market. The district’s proximity to the Capitol Building and to many of Juneau’s tourism jobs could attract the seasonal legislative and visitor industry workers.

The more the merrier

As renters and homeowners move into the Willoughby neighborhood the sense and reality of safety improves, Chaney said.

“The more residents in the neighborhood the more eyes on the street, Chaney said. “It is just safer to have families in the neighborhood. They tend to report crime.

It tends to increase the vitality of the neighborhood.”

Unfortunately Willoughby is currently close to par with downtown Juneau’s problem with “undesirables,” Kim Wold, president, chief appraiser and founder of Alaska Appraisal Associates said.

“Do I want to be panhandled,” Wold said in the voice of a potential resident. “Do I want to walk over cigarette butts that are discarded on the sidewalk? (Willoughby) doesn’t have the feeling I want, not only for myself but also for my children or visitors to my home.”

But even with Willoughby’s new zoning, developers face considerable challenges to easing Juneau’s housing market and create a self-sustainable district. The main issues can be described as an if-then problem.

If Willoughby had more attractions then more residents would want to move there. If Willoughby had more residents then developers would supply attractions to the demand. If Willoughby had more families watching out for each other then the district would be a safe, attractive place for families to live.

“It really is a chicken and the egg deal,” Wold said.

Wold said Seattle has promoted mixed use development with commercial below and residential above. It was found that the developments were not successful unless a large enough number of tenants live in the upper floors to support a business such as a cleaner, a convenience store or a travel agency, he said.

“You would need every tenant from the building (as potential customers),” Wold said. “But also attract other tenants from other buildings. Until you have residential density and numbers great enough developers wont find the area attractive.”

On the other hand, what attraction currently located in Willoughby could attract the necessary density of residents to make a new business feasible, Wold asks.

Wold said that downtown Juneau is still 100 to 200 housing units shy of what it needs to “create a synergy and a feeling of security among home owners and tenants down there and … encourage developers.”

Willoughby’s neighborhood would have to attract between 1,000 and 2,000 new residents to achieve the same self-contained synergy, Wold said. This number would bring enough demand to support the district’s businesses, he said.

To build the infrastructure to house such a number of Juneauites could take a long time unless deep pockets take interest.

In a previous article, Wold talked about changes to Juneau’s investor class. The traditional deep-pocket developers are now in a stage when they are focused more on divesting their investments and not on future development. Banks, skittish after the recent banking crisis, are wary of granting sizable loans to upcoming new investors who do not have as much capital.

“Any development of more than about 12 units you are going to require a large developer with deep pockets who can convince lenders,” Wold said.

With construction costs at around $200,000 per unit, a 12-unit residential development would need a total investment of $2.4 million.

“You are probably not going to get a bank … to loan you that amount without deep pockets,” Wold said. “Willoughby is not going to provide many units without large developers.”

And what could attract new cash-flush developers?

“You need population increase,” Wold said, “and you need additional income. That is really the key to making things affordable.”

To create a more walkable, bikeable Willoughby the city and other development groups encourage the construction of new paths and walkways that allow direct routes through the district’s two super-sized blocks, encourage development of residential and commercial amenities in close proximity – namely one above the other – less parking space and a some form of regular, circulator transit system that links Willoughby and downtown Juneau.

This circulator, which could be a bus, trolley or light rail car or other system, would be a major component of making the district attractive to residents and business, Wold said. “Somebody is not going to stand in the rain for 10 minutes waiting for a bus,” Wold said. “You have some hardy people who would troop from Willoughby to downtown… but I would say that those are a minority of the commuters.” Currently neither the downtown neighborhood nor Willoughby neighborhood is self-supporting.Downtown has no grocery store and offers little parking while Willoughby suffers a dearth ofresidents and fewer attractions such as movies and restaurants.

“There is inadequacies in each one of the neighborhoods,” Wold said.

The right place ahead of its time

The two-story Willoughby Building is a good example of the type of mixed-use development planners would like to see come to the district. It’s located next to the Malaspina Apartments in the Juneau Indian Village.

“I wanted to build a building that would fit into the neighborhood nicely,” Brad Curé owner of Perfect Fit general contractors. “A pleasure to the eyes. What would be the highest use for this particular lot?”

Curé said he designed the building, which has well-lit commercial space on the first floor and apartments up above, on the back of a napkin while at the old Fiddlehead restaurant. He financed construction on this own.

“I’m a small fry,” Curé said. “I’m a small time developer. I’ve never had the opportunity for big money behind me, it has always been the school of hard knocks and I’ve learned a lot along the way. I wouldn’t change it for the world.”

When he obtained permits for the building in the late 1990s Curé had to fight existing code to get many of the characteristics that make the building desirable approved.

“I had quite an uphill battle,” Curé said. His first attempts at getting a Conditional Use Permit and Variance from the city was unsuccessful. “And I had to repeat the process twice. It took some time for them to come around.”

“Basically, when I started to build Willoughby Place a lot of people thought I was crazy,” Curé said.

Since then the city has incorporated Curé’s mix of commercial and residential uses, abutment to the sidewalk and other modern ideas into official city code. A decade after denying his request for an awning that extends from the building over the sidewalk the city sent him notification that this is now allowed under CBJ code.

Curé also designed and build the sleek Patagonia Condominiums in the Village. He lived for a number of years in the corner condo. He has since sold the condominiums.

“It is one of my nicest achievements both design wise and building wise putting those together,” Curé said.

Curé’s take on living in the district differs from Kim Wold’s assessment of Willoughby as an unsafe neighborhood.

“We never had any issues with anybody,” Curé said. “It was quiet at night. We got on well with neighbors. There are a lot of misconceptions about the Village. Essentially it is a very safe neighborhood.”

Curé went on the say that Willoughby is one of the most convenient places to live in Juneau. “You are not on a hill, lots of businesses, you can walk to work,” Curé said. “I can’t really say a negative about it.”

Asking for major changes to the look and layout of existing developments is a lot to expect a property owner and the free market enterprise, Curé said. The city, land owners and developers will have to work together to adapt future plans to the district’s current situation, he said.

“It has to make sense,” Curé said. “And the city will have to make incentives to make these kinds of things happen.”

Curé gives the example of building a path to connect two parts of the district. Property owners would need to understand the impacts of a path running through their development. Granting an easement for the path could affect property prices.

“The city should step in and recognize that this is going to be taking away from your potential to do other things here,” Curé said. It could “provide tax relief, or some financial incentive.”

However, the path could also be a good thing, Curé said. Property owners could benefit if the walkway leads their commercial spaces. And new businesses could pop up if planning allows for some flexibility for development along the walkway, he said.

“It is one of those careful tight-walks,” Curé said. “You don’t want to tell a person what to do with their property but you can direct them toward a higher use of their property by making policies available that foster those types of ideals.”

Another disruption could come from the displacement of existing businesses.

“I would say Willoughby is all tied up,” Curé said. “At this point all of the buildings are built. I can’t think of any substantial commercial lots available.”

To make space some existing buildings could be leveled, Curé said. However, removing them would be disruptive to current Willoughby residents.

The 54-year-old developer agrees that Juneau is seeing a shake-up in its investor class.

“A change in guard so to speak,” Curé said. “That is true.”

However, Curé also attributes a slow-down in Juneau’s population growth since the 1980s and the global slow-down in real estate and other businesses.

“It is a matter of economics really,” Curé said. “The population is aging and in general the jobs don’t pay as much as they used to. Things are slowing down.”

Juneau’s designs for a mixed-use Willoughby have tapped into a growing national trend and an issue currently under debate by Alaska’s Legislators.

Recently, the Alaska House of Representative passed House Bill 50 Multi-Unit Housing: Commercial Use which if made law would free up the Alaska Housing Finance Corporation to own and fund mixed-use developments.

Bill sponsor, Rep. Mia Costello said the bill follows the same trend as Juneau’s mixed use districts.

“People want to live were it is convenient, Costello said, “convenient to shop and convenient to live. Commercial space and residential space can co mingle really to the benefit of both.”

Juneau Representatives Cathy Munoz and Beth Kerttula have signed on as co-sponsors for the bill.

Bill co-sponsor Rep. Les Gara D-Anchorage said communities across the country are “seeing the light” on mixed-use developments. They are rejecting the old style of thinking where neighborhoods are devoid of commercial uses, he said.

Mixed use is a win-win situation, Gara said. “More housing for people who need it and more amenities for those who want them.”

This area is ideal for mixed use development. With proper parking, street-scapes, pedestrian walkways and traffic flow, private investors will move to create retail, office and residential space. The Willoughby District could hold as many as 800 residential units including condominiums and rental properties, many with spectacular views. Hundreds of millions of dollars will flow into the community and create a neighborhood Juneau can be proud of if the Assembly and Community Development Department act decisively in a manner, which encourages private property investment.

Juneau Economic Development Council:

Based on data from the Juneau Multiple Listing Service as of January 2012, Juneau's 2011 average sales price for single-family homes reached $294,818, surpassing the previous high of $293,353 in 2007. For this analysis, a single-family home is defined to include single-family detached, single-family with apartment, single-family attached and condominiums.